Mekong Eye-Kim Jae-kyoung-28 Feb 2018
Samsung Electronics has scrapped its plans to build a production base for smartphones or home appliances in Myanmar due to an unfavorable administrative environment as well as lingering political uncertainties.
The world’s leading smartphone manufacturer, which has three production facilities in Vietnam, has been considering building another plant in Myanmar to capitalize on the country’s cheap labor and rising opportunities in Southeast Asia.
Samsung has “made a final decision” not to build a manufacturing plant in Myanmar after a recent visit to the Southeast Asian country, sources said. It has been reviewing the investment as the Myanmar government continued to ask the firm to build production facilities there over the past few years, they said.
Samsung Electronics currently has one marketing branch in the country’s capital, Yangon, which is operated under Thai Samsung Electronics. “Recently, a small group of Samsung officials, including a ranking executive from the head office, visited Myanmar and had a meeting with Myanmar officials,” said a Myanmar-based source with direct knowledge about the matter.
“After the meeting, Samsung decided not to make any investment as the Myanmar government demanded that Samsung construct power plants and roads (at the company’s own expense) that are essential to build and operate a factory,” he added.
In January 2013, the Korean electronics giant won approval from the Myanmar government to build a factory near Yangon.
However, the investment plan has been deferred as the Myanmar government and Samsung have failed to iron out differences on key issues, such as land area, investment incentives and power supply.
Another source familiar with the matter who regularly visits Myanmar confirmed the cancellation of the investment, saying there are a couple of additional factors that discouraged Samsung from making the investment _ political uncertainty and decentralization.
“People expect that once Aung San Suu Kyi became the leader, there would be many positive changes on the economic front but so far little has changed,” he said.
“Also, the county’s move toward decentralization, driven by conflicts arising from many ethnic groups and different languages, are raising concerns that it will make the government’s decision-making process more complicated and inefficient.”
Samsung denied that it has recently considered investment in Myanmar. In a written answer to The Korea Times, a company spokesman said, “In 2013, we considered building production lines for TVs in Myanmar but dropped the plan in the same year due to a lack of infrastructure, such as power and (industrial) water.” “We have never reviewed it again since then.”
Samsung has been aggressively looking for a new manufacturing hub in underdeveloped areas, including Southeast Asia, in a bid to respond to rising labor costs in China and Vietnam and to develop new markets.
The company has three manufacturing plants in Vietnam _ two for mobile phones in Hanoi and one for TVs and home appliances in Ho Chi Minh City.
Myanmar is emerging as one of the most attractive investment destinations thanks to low labor costs and robust economic growth. With a population of 53.68 million, the country saw its gross domestic product grow 7 percent in 2017, the fastest expansion among 10 ASEAN member states.
